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Can Analog Strength Aid Texas Instruments (TXN) Q1 Earnings?

Zacks Equity Research

Texas Instruments TXN or TI is scheduled to report first-quarter 2019 results on Apr 23, after market close.

The company surpassed the Zacks Consensus Estimate in three of the trailing four quarters, with average positive surprise of 3.68%.

We expect Texas Instruments to perform well in the to-be-reported quarter as well, backed by strength in several higher-margin and high-growth market areas. It is gradually expanding exposure in industrial and automotive markets, which should benefit the upcoming results.

We observe that shares of Texas Instruments have gained 12.4% over the past 12 months against its industry’s decline of 1%.

Expectations From Analog

TI’s analog business has been recording both sequential and year-over-year growth over the last four quarters, driven by strong performance in almost all its product lines. In the last reported quarter, this segment generated revenues of $2.64 billion, up 4% from the year-ago period.

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We expect this trend to continue in the to-be-reported quarter as well, given TI’s compelling product line and manufacturing efficiencies that include growing 300-millimeter Analog output. The Zacks Consensus Estimate for Analog segment revenues is currently pegged at $2.46 billion.

Expectations From Embedded Processing

In the fourth quarter, it generated $791 million revenues, down 12% year over year. This was primarily owing to weak performance of processors and connected microcontrollers during the quarter.

The Zacks Consensus Estimate for Embedded Processing revenues is currently pegged at $781 million.

Overall Picture

TI has always been a well-executed company. Management remains focused on increasing its free cash flow per share and strengthening competitive advantages. However, increasing competition in the auto and industrial space, along with unfavorable currency impact may hurt its results.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

Currently, Texas Instruments has a ZacksRank #3(Hold) and an Earnings ESP of 0.00%, making surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Texas Instruments Incorporated Price and EPS Surprise

 

Texas Instruments Incorporated Price and EPS Surprise | Texas Instruments Incorporated Quote

Stocks to Consider

Here are a couple of stocks that you may want to consider, as our model shows that these have the right combination of elements to post a positive earnings surprise in the quarter to be reported.

Xilinx, Inc. XLNX has an Earnings ESP of +1.75% and carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Verizon Communications Inc. VZ has an Earnings ESP of +0.02% and a Zacks Rank #3.

Waters Corporation WAT has an Earnings ESP of +1.23% and holds a Zacks Rank #3.

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Verizon Communications Inc. (VZ) : Free Stock Analysis Report
 
Waters Corporation (WAT) : Free Stock Analysis Report
 
Texas Instruments Incorporated (TXN) : Free Stock Analysis Report
 
Xilinx, Inc. (XLNX) : Free Stock Analysis Report
 
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